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  DUTY ENTITLEMENT PASSBOOK SCHEME (DEPB)                            

The Duty Entitlement Passbook Scheme is a part of  Duty Remission Scheme.  

For exporters not desire of going through the licensing route, an optional facility is given under DEPB.  

The objective of DEPB is to neutralise the incidence of Customs duty on the import content of the export product.  The neutralisation shall be provided by way of grant of duty credit against the export product.   

The DEPB scheme will continue to be operative until it is replaced by a new scheme which will be drawn up in consultation with exporters.

Under the DEPB scheme, an exporter may apply for credit, as a specified percentage of FOB value of exports, made in freely convertible currency or the payment made from the Foreign Currency Account of the SEZ unit in case of supply by DTA to SEZ unit.

The credit shall be available against such export products and at such rates as may be specified by the Director General of Foreign Trade by way of public notice issued in this behalf, for import of raw materials, intermediates, components, parts, packaging material etc. The credit may also be utilized for payment of Customs Duty on any item which is freely importable.

(ii) The holder of DEPB shall have the option to pay additional customs duty, if any, in cash as well.

Validity

The validity period of DEPB for import shall be as prescribed in the Handbook of Procedures (Vol.1).

Transferability

The DEPB and/or the items imported against it are freely transferable. The transfer of DEPB shall however be for import at the port specified in the DEPB, which shall be the port from where exports have been made.

Imports from a port other than the port of export shall be allowed under TRA facility as per the terms and conditions of the notification issued by Department of Revenue.

Applicability of Drawback

Normally, the exports made under the DEPB Scheme shall not be entitled for drawback. However, the additional customs duty/excise duty paid in cash or through debit under DEPB shall be adjusted as CENVAT Credit or Duty Drawback as per rules framed by the Department of Revenue.

Calculation of Duty Credit

The duty credit under the scheme shall be calculated by taking into account the deemed import content of the said export product as per SION and the basic custom duty payable on such deemed imports. The value addition achieved by export of such product shall also be taken into account while determining the rate of duty credit under the scheme.

Fixation of DEPB Rate 

‘Aayaat Niryaat Form’ prescribes the form regarding fixation of DEPB rates. All applications for fixation of DEPB rates shall be routed through the concerned Export Promotion Council which shall verify the FOB value of exports as well as the international price of inputs covered under SION.

Provisional DEPB Rate 

To encourage diversification and to promote export of new products, the DEPB Committee would be empowered to notifying provisional DEPB rates. However, such DEPB rates would be valid for a limited period of time during which the exporter would furnish the data on export and import for the regular fixation of rates.

Exports in anticipation of DEPB Rate 

No exports shall be allowed under DEPB scheme unless the DEPB rate of the concerned export product is notified.

Port of Registration 

The exports/imports made from the specified ports given shall be entitled for DEPB.

Sea Ports: Mumbai, Kolkata, Cochin, Dahej, Kakinada, Kandla, Mangalore, Marmagoa, Mundra, Chennai, Nhavasheva, Paradeep, Pipavav, Sikka, Tuticorin Vishakhapatnam, Surat (Magdalla), Nagapattinam, Okha , Dharamtar and Jamnagar.

Airports: Ahmedabad, Bangalore, Bhubaneshwar Mumbai, Kolkata Coimbatore Air Cargo Complex, Cochin, Delhi, Hyderabad, Jaipur, Srinagar, Trivandrum, Varanasi, Nagpur and Chennai.

ICDs : Agra, Ahmedabad, Bangalore, Bhiwadi, Coimbatore, Daulatabad, (Wanjarwadi and Maliwada), Delhi, Dighi (Pune), Faridabad, Guntur, Hyderabad, Jaipur, Jallandhar, Jodhpur, Kanpur, Kota, Ludhiana, Madurai and the land Customs station at Ranaghat Mallanpur, Moradabad, Meerut Nagpur, Nasik, Gauhati (Amingaon), Pimpri (Pune), Pitampur (Indore), Rudrapur (Nainital), Salem Singanalur, Surat, Tirupur, Udaipur, Vadodara, Varanasi, Waluj, Bhilwara, Pondicherry ,Garhi-Harsaru, Bhatinda, Dappar, Chheharata ( Amritsar), Karur, Miraj and Rewari.

LCS: Ranaghat, Singhabad , Raxaul , Jogbani, Nautanva ( Sonauli), Petrapole and Mahadipur.

The exports made to the following Special Economic Zones (SEZ) are also entitled to DEPB

SEZ : Santacruz , Kandla, Kochi, Vishakhapatnam, Chennai, FALTA, Surat, NOIDA

Provided further that the Commissioner of Customs may, either by a public notice or on the written request of the exporter/ DEPB holder, by special orders and subject to such conditions as may be specified by him permit imports or exports from any other sea port, airport, inland container depot or through a Land Customs Station.

The DEPB shall be issued with single port of registration, which will be the port from where the exports have been effected.

Maintenance of Record 

Each Custom House at the ports shall maintain a separate record of the details of the exports made under the DEPB shipping bill.

Credit under DEPB and Present Market Value 

In respect of products where the rate of credit entitlement under DEPB Scheme comes to 10% or more, the amount of credit against each such export product shall not exceed 50% of the Present Market Value (PMV) of the export product. At the time of export, the exporter shall declare on the shipping bill that the benefit under DEPB Scheme against the export product would not exceed 50% of the PMV of the export product.  However, PMV declaration shall not be applicable for products for which value cap exists irrespective of the DEPB rate of the product.

Utilisation of DEPB credit 

The credit under DEPB shall be utilised for payment of customs duty on any item which is freely importable.

Application for DEPB

An application for grant of credit under DEPB may be made to the Regional Authority concerned in the form given in ‘Aayaat Niryaat Form’ alongwith the documents prescribed therein. The agency commission shall be allowed for the DEPB entitlement upto the limit of 12.5% of FOB value only. The FOB value in free foreign exchange shall be converted into Indian rupees as per the exchange rate for exports, notified by Ministry of Finance, as applicable on the date of order of “Let Export” by the Customs.

In respect of consignment exports wherein the exporter has declared the FOB value of the product on a provisional basis, the exporter shall be eligible for final assessment of such shipping bill based on the actual FOB realised upon sale of such goods in freely convertible currency. The agency commission shall be allowed for the DEPB entitlement upto the limit of 12.5% of FOB value only. However, the FOB value of foreign exchange shall be converted into Indian rupees as per the exchange rate for exports, notified by Ministry of Finance, as applicable on the date of order of “Let Export” by the Customs.

An application for grant of credit for supplies from DTA to SEZ can be made by the DTA unit or the SEZ unit. The DTA unit may claim the benefits either from the Regional Authority or the Development Commissioner concerned. In case claim have been filed with the Regional Authority, the Regional Authority while allowing the benefits to the DTA unit will simultaneously endorse a copy of the communication to the concerned Development Commissioner alongwith the details of export documents against which benefits have been allowed for confirmation of the transaction involved. In case the DTA supplier prefers claim with the Development Commissioner, the Development Commissioner shall verify the Denied Entity List (DEL) status of the supplier from the DGFT website before allowing DEPB benefits. The SEZ unit will file application with the Development Commissioner concerned in ‘Aayaat Niryaat Form’ along with the following documents:

1.   Bank receipt (in duplicate)/ demand draft evidencing payment of application fee in terms of Appendix 21B.

2.   A copy of bill of exports issued by Customs in the SEZ.

3.   A copy of invoice showing FOR value of supply, DEPB entitlement on such supply and total value realised from such sale.

4.   Bank certificate of realisation in the form given in Appendix 22B.

5.   In case SEZ unit opts to apply for the DEPB benefit for such supplies received, a disclaimer (along with the IEC of DTA Unit endorsed on it) certificate from DTA unit declaring that the DTA unit shall not claim any benefit on such supplies and authorising SEZ units to claim DEPB benefit on such supplies.

In cases where the applicant applies for DEPB after realisation or shipments are made against confirmed irrevocable letter of credit or bill of exchange is unconditionally Avalised/ Co-Accepted/ Guaranteed by a bank and the same is confirmed by the exporters bank and certified by the bank in the relevant Bank certificate of export and Realisation, the DEPB shall be issued with transferable endorsement. In other cases, the DEPB shall be initially issued with non-transferable endorsement.  Upon realisation of export proceeds, such DEPBs can be endorsed as transferable, if the applicant so desires.

Monitoring of Realisation

The Regional Authorities shall monitor the cases where the DEPB has been granted prior to realisation of export proceeds (except the cases where shipments are made against confirmed irrevocable letter of credit or bill of exchange is unconditionally Avalised/ Co- Accepted/ Guaranteed by a bank and the same is confirmed by the exporters bank) so as to ensure that realisation takes place within the prescribed time failing which they shall initiate action for recovery of an amount equivalent to DEPB credit with 15% interest. The recovered amount in such cases shall be deposited in the head of account of Customs as stated in paragraph 4.29.

If the export proceeds is not realised within six months or such extended period as may be allowed by RBI, the DEPB holder shall pay in cash an amount equivalent to the duty free credit utilised on imports, against such exports with 15% interest from the date of import till the date of deposit. In such cases, where the amount realised in foreign exchange is less than the amount on which DEPB credit has been obtained, the holder of DEPB shall pay, in cash, an amount proportionate to the duty free credit utilised on imports, with 15% interest from the date of imports till the date of deposit.

Time Period

The application for obtaining credit shall be filed within a period of twelve months from the date of exports or within six months from the date of realization or within three months from the date of printing/ release of shipping bill , whichever is later, in respect of shipments for which the claim have been filed. 

Wherever provisional shipment has been allowed by the customs authorities, DEPB against such exports shall be issued only after the release of the shipping bill by the Customs. In such cases, application for DEPB shall be filed within six months from the date of release of such shipping bill or six months from the date of realisation, whichever is later.

Frequency of Application

All the shipping bills in any one application must relate to exports made from one Custom House only. There is no limit on the number of shipping bills which can be filed through EDI mode in a single application.

Verification by Customs

In case of EDI shipping bills before 1.10.2005 and non-EDI shipping bills, the Regional Authority shall ensure that while issuing the DEPB, the Shipping Bill No(s). and date(s), FOB value in Indian rupees as per Shipping Bill(s) and description of export product are endorsed on the DEPB. Before allowing the imports against such DEPB, the Customs shall verify that the details of the exports, as given on the DEPB, are as per their records. However, in case of EDI shipping bills issued on or after 1-10-2005 from EDI ports which are being transmitted electronically by Customs to DGFT, the DEPBs issued shall be sent to Customs at the port of registration through an electronic message exchange system and the DEPB shall be registered at the port of registration electronically. No verification of shipping bills against which such DEPBs have been issued, will be required before allowing imports against these DEPBs.

Revalidation

No revalidation shall be granted beyond the original period of validity of DEPB unless it expires in the custody of the Regional/ Customs Authorities as per the provisions under para 2.13 of the Handbook.

Re-export of goods imported under DEPB Scheme

Goods imported under DEPB scheme, which are found defective or unfit for use, may be re-exported, as per the guidelines issued by the Department of Revenue. In such cases 98% of the credit amount debited against DEPB for the export of such goods, shall be generated by the concerned Commissioner of Customs in the form of a Certificate, containing the amount generated and the details of the original DEPB. Based on the certificate, a fresh DEPB shall be issued by the concerned Regional Authority. The fresh DEPB, so issued, shall have the same port of registration and shall be valid for a period equivalent to the balance period available on the date of import of such defective/unfit goods.

Issuance of DEPB and other duty credit certificates/ DFRC against lost EP copy of the Shipping Bills

In case where EP copy of the Shipping Bill has been lost, the DEPB and other duty credit certificates /DFRC claim can be considered subject to submission of the following documents:-

a) A duplicate/certified copy of the Shipping Bill issued by the Customs Authority in lieu of original;

b) An application fee equivalent to 2% of the DEPB or other duty credit entitlement or 1% of DFRC entitlement, as the case may be, in respect of lost Shipping Bills.

However, no fee shall be charged when the Shipping Bill is lost by the Government agencies and a documentary proof to this effect is submitted;

c) An affidavit by the exporter about the loss of Shipping Bills and an undertaking to surrender it immediately to the concerned Regional Authorities, in case the same is found subsequently.

d) An indemnity bond by the exporter to the effect that he would indemnify the Government for the financial loss if any on account of DEPB or other duty credit certificate /DFRC issued against lost Shipping Bills.

The Customs Authority, before allowing clearance, shall ensure that no DEPB/DFRC benefit has been availed against the same shipping bill.

The claim against the lost Shipping Bill shall be preferred within a period of six months from the date of release of duplicate copy of shipping bill and any application received thereafter will be rejected. However, if a provisionally assessed DEPB shipping bill is lost, the time period for filing an application for DEPB would be six months from the date of release of the finally assessed shipping bill.

Loss Of Original Bank Certificate

In such cases where original bank certificate has been lost, the DEPB/DFRC claim can be considered subject to submission of following documents:

a)     A duplicate copy of the Bank Certificate issued by the bank authority in lieu of original loss.

b)     An application fee equivalent to 2% of the DEPB entitlement or 1% of DFRC entitlement, as the case may be, in respect of lost Bank Realisation Certificate.

c)      An affidavit by the exporter about the loss of Bank Certificate and an undertaking to surrender it immediately to the concerned Regional Authorities, in case the same is found subsequently.

d)     An indemnity bond by the exporter to the effect that he would indemnify the Government for the financial loss .if any on account of DEPB/DFRC issued against lost Bank Certificate.

The claim against the lost Bank Certificate shall be preferred within a period of six months from the date of realisation and application received thereafter will be rejected.

In such cases, where both the documents have been lost, the exporter shall follow the procedure laid down in paragraphs “Re-export of Goods Imported under DEPB Scheme” and  “Issurance of DEPB/DFRC against lost EP copy of the Shipping Bill” above .